California lawmakers sound alarm on increased fuel costs

By Keith Goble, Land Line state legislative editor | 8/4/2014

California state lawmakers returned to the state Capitol on Monday to continue discussion on issues that include a delay to putting fuels under the state’s cap-and-trade program.

The program has been in place since 2006 through passage of AB32 – the California Global Warming Solutions Act. The program allows the California Air Resources Board to cap greenhouse gas emissions and require companies to buy permits to exceed those caps.

Currently, the cap applies to power plants and other heavy manufacturers. Starting Jan. 1, 2015, the program is set to expand to include oil companies. It is estimated the program could result in at least a 15-cent-per-gallon fuel tax increase.

The state already claims the highest fuel prices in the continental U.S. The average price for a gallon of diesel this week is 4.119, according to the U.S. Energy Information Administration.

In the weeks leading up to the end of the Legislature’s summer break, lawmakers on both sides of the aisle advocated for action to prevent the looming tax increase.

Concern about rising fuel costs spurred 16 Democratic Assembly members to send a letter to CARB Chairman Mary Nichols asking her to delay, or redesign, the program for greenhouse gas emissions.

“We request that you delay expanding the cap-and-trade program to cover transportation fuels or at least change the program so that it does not unnecessarily increase fuel costs in order to generate revenue for the state,” the letter states.

Assemblyman Henry Perea, D-Fresno, said the program was created to limit greenhouse gas emissions, not generate revenue for the state.

“This new revenue comes out of the pockets of hard-working Californians,” Perea said in a recent news release. “The Legislature did not ask for the cap-and-trade program to work this way.”

Assemblywoman Cheryl Brown, D-San Bernardino, said in addition to the negative effect higher fuel prices would have on Californians who rely on their vehicles on a daily basis, she is asking the governor to delay implementation because of the effect it would have on truck drivers trying to do business in the state.

“We also have a significant trucking sector, which is vital to the health of our economy,” Brown stated.

Republicans at the statehouse are also calling attention to the issue.

In a letter from 24 Assembly Republicans to Gov. Jerry Brown, they request the governor use his executive authority to delay expansion of the program. The lawmakers cite concerns about “wild fluctuations” in the price of gas and diesel that would be caused by linking them to carbon auctions.

In addition to letters, Perea introduced a bill to push back the looming rule. Specifically, AB69 would delay for three years the rule requiring the energy industry to purchase permits for transportation fuels.

The Owner-Operator Independent Drivers Association is on record in support of delaying the mandate. The Association sent communication to California state lawmakers conveying their concerns about the increased costs that small-business truckers would be forced to absorb.

“Fuel is the largest expense for truckers and every trucker operating in California would be negatively impacted by the underlying mandate,” said Mike Matousek, OOIDA director of State Legislative Affairs. “AB69 would delay this harmful law and allow lawmakers to further study potential impacts and perhaps make changes.”

OOIDA also sent a Call to Action to California truckers encouraging them to contact their state lawmakers in support of the bill.

AB69 awaits consideration in the Senate.

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